By Paul Maryniak
Chandler already has more than three times as many homes on the market as they did a year ago as prices in the Valley are falling at a faster rate than expected, according to a leading Metro Phoenix market analyst.
The Cromford Report said last week that if no new homes in Chandler came up for sale it would take three and a half months to sell the current inventory for sale whereas a year ago it would have taken only a month.
Surveying 39 communities in the Valley, the Cromford Report placed Chandler in the middle of the pack, with communities that lean more towards higher-priced homes, like Paradise Valley, having a four-month inventory of homes and others like El Mirage having a one month supply.
Chandler already has enough homes on the market to be one of the most attractive areas for homebuyers in the Valley to score a bargain, he said.
“Clever sellers will find that the situation is very fluid and out of their hands,” the report said.
“Prices are reacting much faster to poor market conditions than expected,” he said of the housing scene across the valley.
“In 2005 and 2006, it took a long time for prices to change direction. In 2022, change happened almost overnight. This is probably because people are ready to believe that price drops are likely when in 2005 most people still believed that house prices never go down. Whatever the reason, sellers in 2022 have been willing to quickly and frequently reduce their asking prices and accept offers well below them.
Cromford also predicted that prices would continue to fall until demand picks up.
“The pressure to sell at lower prices comes from the sellers themselves,” he said. “Low demand means they are competing with other sellers and a lower price is an obvious tool for them.”
Fountain Hills, Paradise Valley, part of Scottsdale and Cave Creek are in a different situation and, in a way, in a different world than the average buyer and seller.
These four communities are widely regarded in the realm of luxury housing, where homes priced at $1.5 million and up haven’t shifted as sharply and quickly from a seller’s market to a buyer’s market as the rest. of the valley, according to the report.
“The $1.5m+ luxury market is seeing much less supply growth and although the market is deteriorating due to weaker demand, the deterioration is much slower,” said he said two weeks ago, although last week he said even that category was now showing demand. weakens.
Three weeks ago, the Cromford report said that while the recent increase in the number of homes for sale appears to be slowing, “demand not only remains very weak, but is weakening further”.
He said July’s 7,887 registrations were not only 28% lower than a year earlier, but also the lowest end of July since 2007.
He also said the listing success rate – how quickly a house sells – has dropped in three months from 91% to 73%.
While not as bad as the “20.4%” pass rate from 2008, Cromford said, the statistic “is a reliable and crucial indicator that flashes red.”
“We need this to stabilize and start to rise if we are to be optimistic about our outlook,” the Cromford report said, adding that “there are some reasons to expect market conditions to improve just in time. Street corner”.
But he only lists one reason – and doesn’t express much enthusiasm about it.
“A big drop in interest rates would almost certainly help,” he said, “but it’s not something that’s widely expected.”
The Cromford report also suggested that bigger changes to the valley’s housing market could come before the end of the year.
“Prices have looked wobbly over the past two months,” he said. “But as buyers start to muscle in, we need to be prepared for more serious consequences. Although we cannot accurately forecast several months in advance, it would be reasonable, based on current trends, to expect significant declines in average prices, median prices, and average price per square foot by the end of 2022. Current trends can – and often change – so it’s not baked in, just a case reasonable basis.
He also said rapid inventory growth may slow soon, but without a corresponding increase in demand.
“Builders are apparently slowly reacting to the changing housing scene.
“Permits for single-family homes are now falling in response to weak demand, but probably not as fast as they should,” the Cromford report said.
He said as of June 30, 17,788 single-family building permits had been issued so far this year in Maricopa and Pinal counties year-to-date — down slightly from 18,803 the year. last for the first six months of 2021.
“There were just 2,248 single-family permits issued in June, which is the lowest monthly total since May 2020,” the Cromford report said.
At the same time, multifamily developers aren’t slowing down at all and are at what the Cromford report called “complete gung-ho status.”
In the first six months of this year, a record 8,640 multifamily permits were issued in Maricopa and Pinal counties.
“Last year there were 6,871 at the same time and that was highly regarded,” the Cromford report said. “There were 1,890 shows in June, making it the fourth busiest month ever.”